Upstairs Down - and Out?

A money-starved mental health treatment unit may die in its infancy

Less than four months after it opened, the inpatient unit at the NeuroPsychiatric Center is losing money at a rate that may force local health officials to shut it down.

The board of trustees of the Mental Health & Mental Retardation Authority of Harris County, the agency that operates NPC, has given Executive Director Steven B. Schnee until late March to come up with a financial plan to save the 16-bed unit. It is on the second floor of the old Ben Taub clinic; the first floor is a psychiatric emergency room that opened in October 1999.

NPC is losing $300,000 a month. Schnee told MHMRA trustees at a January 23 board meeting that the agency "miscalculated" the number of uninsured patients who would seek treatment at NPC. The agency had counted on recouping about $3.8 million from Medicaid and other insurers to balance NPC's $10 million budget, which is only partially covered by tax revenue from the state and Harris County. But the actual reimbursements add up to far less than expected.

Deron Neblett

Executive Director Steven Schnee blames the problems on a program that doesn't cover all costs of patient care.

Deron Neblett

Executive Director Steven Schnee blames the problems on a program that doesn't cover all costs of patient care.

Schnee had recommended that the board authorize MHMRA to stop admitting patients to NPC immediately, divert new ones to the Harris County Psychiatric Hospital and eventually "mothball" the second floor. Instead, trustees voted to put off a decision for 60 days.

In the meantime, the board told Schnee to put together a business plan for NPC and begin shopping it to Harris County Commissioners, state legislators and private charitable organizations. Schnee's first goal is to secure so-called bridge financing to carry NPC through to late spring when, officials hope, the legislature will increase mental health funding. Until then, the board's nondecision means at least another $600,000 in losses at NPC.

That's an expense MHMRA can ill afford. One of the largest public mental health agencies in the country, MHMRA is also one of the poorest. The state spends about $12 per resident to treat mental illness in Harris County; the national average is $27. MHMRA already has been forced to cut back sharply on clinical treatment and social services available for the poor and uninsured. Last August 31, just days before the second-floor "crisis stabilization unit" opened, MHMRA ended its budget year nearly $3 million in the hole -- a deficit caused largely by unforeseen operating costs at NPC.

To be sure, some of MHMRA's financial wounds are self-inflicted. A few months ago the agency forfeited $5 million to the Texas Department of Mental Health & Mental Retardation for failing to execute a state-mandated program to distribute the latest antipsychotic drugs (see "Catch Us If You Can," by Brian Wallstin and Margaret Downing, November 19, 2000).

More recently, the agency ran afoul of the state by apparently failing to meet quarterly performance targets, which could force MHMRA to forfeit another $800,000. When the crisis at NPC arose two weeks ago, Schnee asked state mental health officials to help but was told no money was available.

Despite NPC's financial instability, most mental health advocates urged MHMRA trustees to find a way to keep the second floor in business. To close it would be "unconscionable," said Betsy Schwartz, executive director of the Mental Health Association of Greater Houston.

The trustees unanimously agreed. "It's time we put the cost to human beings first," said board vice-chair Lynn Cleveland. Trustee Paige Cokinos called the board's decision "a victory." Mae McMillan, another trustee, said, "I feel a lot of hope in this room."

But some advocates were more angry than hopeful. Robert Hager, an attorney who sits on MHMRA's Adult Mental Health Planning Advisory Council, said he was "stunned" at the board's decision. In Hager's view, MHMRA shouldn't have opened NPC's second floor without the money to operate it.

"They should be asked to explain how this happened," he said.

Schnee blames changes in "the environment" since NPC was conceived four years ago. Back then, he said, Harris County didn't have a Medicaid managed-care program, which now routinely fails to cover the complete cost of an eligible patient's care. And, Schnee says, no one expected mental health funding from the state to become so scarce.

"The second floor has demonstrated what it can do," he says. "The problem is we need to have paying customers in 11 of our 16 beds on average, and they have been overwhelmingly indigent."

Another explanation is that NPC was an idea that was ill-conceived and poorly executed. When county commissioners agreed in 1997 to pony up $5 million for NPC's construction, they apparently did so on little more than assurances by MHMRA and local advocates that the facility was desperately needed. MHMRA had no detailed business plan for NPC, nor did the agency conduct a feasibility study or prepare any long-range financial projections on the project's viability.

Today, no one disputes the need for NPC's emergency room. Until the first floor opened, the acute-care psychiatric unit at county-run Ben Taub Hospital was on "drive-by" status, or filled to capacity, for more than a week every month. MHMRA expected to treat 20 to 25 emergency-room patients a day at NPC; more than 40 are coming in daily, many of them new to the public mental health system.

NPC's second-floor unit provides three- to five-day stays for patients who cannot be stabilized in the downstairs emergency room. George Santos, medical director of West Oaks Hospital and a member of the Harris County Mental Health Needs Council, says the unit "was never a good idea." He believes it is an example of MHMRA's failure to "really look at how best to address the needs that are out there."